Interesting Facts about Mexico Research Paper Example | Topics and Well Written Essays - 1250 words

Interesting Facts about Mexico - Research Paper ExampleA series of measures were put in place in the youthful 1980s and early nineties by the Mexican administration geared towards market liberation. Initially, Mexico had adopted protectionist market policies in order to boost industrial growing and home economy however, these policies did not achieve the expected results. In the 1980s, Mexico faced inflation and there was a decline in the living standards. The democracy go through a number of economic challenges in the 1982 debt crisis in which it was unable to meet its foreign debt payment obligations. The government addressed these challenges by privatizing government-owned industries and the journey to liberalization began (CRS 12). The rural area liberalized foreign market and investment by signing the General Agreement on Tariffs and Trade and the (NAFTA) North American Free Trade Agreement which maxim the privatization of nearly 1000 state enterprises, including the bank ing sector which had been state-owned since the crisis of 1982 (Hanson 2). These reforms in the initial stages attracted a substantial amount of foreign private investments until 1993 when the foreign capital inflow started to go down. By the close of the year 1994, Mexico had currency crisis leaving the government with no option, but to ditch the fixed exchange rate and replace it with a travel exchange rate policy. The result of this was that Mexicos currency went down by about 50% within a period of six months, leading the country to deep recession. The currency (Peso) was floated because there was overspending in the economy which generated a substantial currency deficit, the government had no sufficient reserves yet it had accumulated senior high levels of debt, and the banking system was overexposed. After 1994 devaluation, President Ernesto Zedillo of Mexico took several measures to restructure the economy and reduce the effects of the currency crisis on the disadvantaged s ectors of the economy. The main aim here was to fabricate conditions for economic growth and adjust the economy within a short span of time. The IMF and the United States came to the aid of the government pooling together a financial resist of 50 billion dollars. The Zedillo Administration adopted tighter monetary and fiscal policies to counter inflation and cushion some costs of the crisis in the banking sector. The plan entailed an increase in the VAT, cutting down budgets, increase in the price of gasoline and electricity and the decrease in government subsidies. The peso depreciation through the end of the 1990s led to increasing in exports and was of benefit to the export sector. However, the devaluation, on the other hand, reduced the real income hurting the poor and the emerging middle class. The signing of the NAFTA and agitate of the Mexican economy to export based aided to neutralize the impacts of the Peso devaluation. President Ernesto Zedillo administration and that of his successor, President Vicente Fox, carried on with market liberalization, privatization of government enterprises, and economic deregulation. finished these tighter monetary and fiscal measures, these administrations were able to lower down fiscal deficit, bring inflation under control, and spur economic growth. Current Economic Situation The Mexican economic growth was 3.9% in the year 2011 and is projected to grow by 3.7% in the year 2012 and 3.8% in the year 2013.